Reeder & Davis v. Dargan

The opinion of the court was delivered by

On April 23d, 1870, H. K. W. Flinn executed a mortgage of twenty-four hundred acres of land to the plaintiffs to secure a debt of $5500. In 1871 Ann D. Flinn, the wife of H. K. W. Flinn, having set up some claim to the land, was made a party to the complaint for foreclosure which had been instituted. A. F. Edwards held a prior mortgage, and he also was made a party. Pending action H. K. ~W. Flinn died, January, 1872, and the suit was continued against his administrator, T. George Dargan. Soon after the death of Flinn, Ann D. Flinn became the owner of the Edwards mortgage. The plaintiffs amended their complaint November 5th, 1873, claiming oj Ann D. Flinn rents and profits of the mortgaged premises. *182The case came up on appeal, and this court decided that the land mortgaged belonged to' H. K. W. Flinn, the mortgagor, and decreed foreclosure against him ; but the right which had been set up for rents and profits from Mrs. Flinn was reserved. Reeder & Davis v. Flinn, 6 S. C. 242.

The sale under the decree of foreclosure was made December, 1877, and the proceeds of sale paid to Mrs. Flinn, the owner of the Edwards mortgage, but they were not sufficient to satisfy the mortgage. From the death of her husband, in 1872, Mrs. Flinn and her infant son continued to reside on the land and received the rents and profits thereof until the sale under the order of foreclosure, 1877, and the plaintiffs, junior mortgagees, claim that she should account for the rents and profits towards satisfaction of ’her mortgage. The case was heard by Judge Hudson, who decreed that Mrs. Flinn was not bound to account for the renjts and profits priof to the sale under the order for foreclosure, and the appeal comes to this court upon the single question of her liability.

The.points made, arising out of the fact that Flinn and his wife in the litigation claimed that the latter was really the true owner of the land mortgaged, will not be considered. Claims set up and not established cannot alter the rights of the parties. This court decided that the land belonged to H. K. W. Flinn, and had never been the property of his wife. That fixed the relative positions of the parties from the beginning, and their respective rights must be determined only upon that view.' ' H. K. W. Flinn was the mortgagor in actual possession, and Ann D. Flinn was his wife, living with him until his death, in 1872. After his death she and her son simply remained as heirs-at-law of the deceased mortgagor. When there is no new entry, but the heir is in as of his ancestor’s possession, the possession of the heir is that of the ancestor. King v. Smith, Rice 15; Dillard v. Philson, 5 Strob. 215. So that the single point is whether a mortgagor (or, aftef his death, his heirs) in possession of the mortgaged premises, is liable to the mortgagee for rents and profits upon a ..complaint for foreclosure which makes no allegation that the land is insufficient for his security without resort to the rents and profits, or that the mortgagor is insolvent, and *183which contains no prayer for the appointment of a receiver or other relief of that character.

At the common law a. mortgagee was, immediately after the •execution of the mortgage deed, seized of an estate in fee, and the mortgagor was considered in the language of some of the cases as his tenant at will. The mortgagee was deemed the absolute legal owner, and had the right to enter, and could maintain a possessory action against the mortgagor. If there were covenants in the mortgage deed, by which the mortgagor was entitled to retain the possession, the Court of Equity would protect him in the enjoyment of such right.

But under our act of 1791 a mortgage in this state is a very •different thing from the mortgage at common law. That act declares “that no mortgagee shall be entitled to maintain any pos-sessory action for the real estate mortgaged, even after the time allotted for the payment of the money secured by mortgage is elapsed, but the mortgagor shall still be deemed owner of the land and the mortgagee as owner of the money lent or due, and shall be entitled to recover satisfaction for the same out of the land,” &c. Gen. Stat. 536. The effect of this act was to change a mortgage from being a conveyance on condition to a mere lien as a security for a debt. State v. Laval, 4 McC. 340; Mitchell v. Bogan, 11 Rich. 703. It is not stated that the mortgage of plaintiffs has any special stipulation upon the subject of rents and profits. Assuming it to be in the usual form and subject to the act of 1791, we do not see upon what ground the plaintiffs can claim to have any legal right either to the possession of the prmises or rents and profits thereof before the sale under the decree in foreclosure. Such claim rests upon the right of entry and possession at common law, and, if allowed, would be in the very face of the act that “ the mortgagor shall still be deemed owner of the land.”

But it is urged that upon this subject the doctrine of equity is different, and that this is a proceeding in the nature of a bill in equity on the part of mortgages whose security is not adequate to make the mortgagor account for rents and profits as auxiliary to the land in paying the debt. The general rule certainly is that equity follows the law, and we suppose that the *184authorities relied upon to support the alleged equity doctrine are taken from those states where the mortgage still retains all its common law characteristics. The case cited from our own reports of Stoney v. Shultz, 1 Hill’s Oh. 499, was a case falling underthe exception in the actof 1791, where “themortgagor wasout of possession.” Johnson, J., in delivering the opinion of the court, said: “I take it, therefore, as clear, that Shultz, the mortgagor, heingout of possession, tberightsandpowersofBrooks asmortgagee, in respect to the purchases of the lots in possession under Shultz must be determined according to the rules of the common law, and according to that he had a right to receive and retain the rents, having given notice of the mortgage to the tenants in possession.” It is true that in the case of Matthews v. Preston, note to Boyce v. Boyce, 6 Rich. Eq. 307, something is said which would seem to indicate that under some circumstances the Court of Equity might decree rents and profits in the land as incident to, and part of, the security given. The court says: “ The mortgagee in this court [equity], claiming an account of the rents and profits must stand upon the general doctrine laid down by Coote on Mort. 342, that although in equity the mortgagor remains the actual owner of the land until foreclosure, entitling him while in possession to the receipt of the rents and profits without account,' yet equity regarding the land, with all its produce, as a security for the mortgage debt will restrict the right of ownership within those bounds which may not operate to the detriment or injury of the mortgagee.” Yet in the same case the view we entertain is expressed in terms which we are content to adopt. “ The mortgagor in possession is not liable to the mortgagee on account of the rents. There is no case that goes so far, and the authorities establish a contrary doctrine, and I should have no difficulty in adopting the conclusion that the purchaser of the equity of redemption in possession occupies the same relations to the mortgagee and upon the same principle must be equally exempt. No tenancy in either case exists or can be implied. In such a case the rent as an auxiliary fund to aid in the satisfaction of the debt is beyond the reach of the mortgagee, though his security from the corpus of the estate may be made-*185quate. At least it is so in the form of proceeding which has been adopted in this case.”

Jones on Mort, § 771, states the principle as we understand it: “A mortgagee has no specific lien upon the rents and profits of the mortgaged land unless he has in the mortgage stipulated for a specific pledge of them as part of his security. He has no claim upon them until he has the right to take possession of the premises under his mortgage.”

The Circuit decree is affirmed, and the appeal dismissed.